Friday, April 3, 2015

Let's Review the 2015 "Fearless Forecasts"

Just for fun I tossed out a 2015 "Fearless Forecast" last December. It was just a bullet list of a few predictions for this year while admitting none of them might be right. Now that we are 25% of the way into 2015, let's look at them to see how they are going. Below each original prediction is brief comment (in bold type) on how well that prediction is going so far.

1- The IMF will include the Chinese Yuan in the SDR basket of currencies (if I miss this one I will probably have a pretty bad year forecasting wise as this one should be a cinch)This one is looking pretty solid right now. Of course it was also pretty easy to project if you are following this story at all.2- The situation in the Ukraine will ramp back up as a focal point of crisis in early 2015 (say by March). The IMF needs $15 billion to keep the Ukraine from defaulting and right now they don't have it. Russia is being pressured at home economically so expect them to make it as hard as possible for the Ukraine to avoid default (to embarass the west). This one should get interesting soon. The threat of a larger military war could increase adding to uncertainty.This one hit pretty well. The Ukraine did flare back up and the IMF is still taking a sizeable risk if it follows through on the proposed new aid package. There is a "ceasefire" for now, but a larger military conflict is still possible for sure.3- Some time by late 2015, the threat of another global financial crisis will surface in the media. The threat may or may not be real, but people will think it is real. Media and political pressure will be put on the Republican Congress to do something about it. That something will be to allow reforms at the IMF to give it more funding and ability to respond to the perceived threat. (If this does not happen by late 2016, I think it may not happen at all because the Republican Congress is well setup to take the blame up until the next election).This one is still pending. So far no crisis. But most are projecting one this fall if we get one. We'll see.4- The IMF will hold more meetings to come up with some way to re-balance voting power and influence at the IMF without having to go through the US Congress. (Congress reaction to this will be interesting if the IMF bypasses them by changing the IMF voting rules).This one is also right on target, but was also an easy one to project.5- Market volatility will go higher in 2015. Stock markets, gold, silver, oil etc. will have very wide swings up and down. The US stock market will top out for now some time in 2015. This market volatility will lead up to the perceived crisis mentioned in #3 above; perhaps by the fall of 2015 (enough time to establish the Republican Congress as the entity to blame in the mind of the public, but this could easily spill over into 2016).The volatility part has come true. The stock market top has not. Still pending as to how well this one will turn out.6- Both the IMF and the BIS will continue to issue warnings about the stability of the financial system and the need for more global oversight and funding at the IMF to deal with "the next crisis". They will have warned us they will say. And they will have. It's just that no one is paying any attention to them.This is another easy one and was on target.7- Gold will continue to be controversial. There will be a louder call for gold to return as money by gold advocates, but that won't happen. Gold will still be the ultimate hedge for nations, but not for the public. The general public will view gold as too expensive. If the general public opts to buy precious metals, they will mostly buy silver. If there is no crisis in 2015, the western public will not be interested in gold at all. Silver will still have a chance to do OK due to industrial demand increase for solar power, etc. Either way, silver outperforms gold in 2015. I feel good about getting this one right,whether the price goes up or down :)Silver has outperformed gold so far and I think that will continue because the historic ration between the two is so overextended in favor of gold.8- China and Russia will form an even closer alliance in an effort to diminish US global influence and power. How this turns out will be interesting as the US Congress now is much more nationalistic and potentially confrontational with those countries. Russia and the US will both pressure the EU to be on their side. This was was also on target and will still be interesting to follow all year.9- Seattle repeats as Super Bowl Champs? We'll see. Just for the record, I am not a Seahawks fan. Just an observer :). I actually like college sports better.I blame Pete Carroll for missing this one :)

Conclusion: Overall better than I would have expected, but the year is still young :)

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